Professor Diehard Found an Effective Antibiotic for the DEPRESS Bacteria

question 45

Multiple Choice

Professor Diehard found an effective antibiotic for the DEPRESS bacteria, and patented the drug. He believes that he can sell the patent for $20 million. He then formed a corporation and invested $400,000 in setting up a production plant. There are 2 million shares of stock outstanding. If the professor's belief is correct, what would be the price per share and the book value per share?

• A) $10.20; $.20
• B) $10.00; $.20
• C) $9.80; $.40
• D)$9.80; $.20

---

Definitions:

Common Stockholders' Equity

The portion of a company's equity that is attributable to its common shareholders, including retained earnings and paid-in capital.

Days' Sales

Days' Sales, often referred to as Days Sales Outstanding (DSO), measures the average number of days it takes a company to collect payment after a sale has been made.

Inventory

Inventory is the total amount of goods and materials held by a company for the purpose of resale or production.

Return on Total Assets

Return on Total Assets is a financial ratio that measures the profitability of a company in relation to its total assets, indicating how effectively a company is using its assets to generate earnings.